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Open Source Software: Wealth vs. Money

(Note: This is post 2 of a multi-part series about Open Source Software (OSS), and what the idea of Open Sourcing means economically. Read post 1.)

Money is not wealth. Money is typically just a collection of little bits of metal and paper with all sorts of designs scrawled across them. It has very little value of its own. Consequently, economists are not concerned with money, except as a tool for measuring wealth. And, while it is a fairly common way to measure wealth, money is not the only tool people use to determine value. In the Open Source world, money is one of the least common currencies of wealth.

Instead, an entirely different primary currency is used: reputation. That’s right, reputation. And, the definition here is no different from anyplace else. The primary measure of wealth in the Open Source Community is simply how well-known and respected are a hacker’s skills and code. The more well-known and respected he is, the more wealth he has, and vice versa.

On the surface, it seems a bit puzzling that a person’s reputation could be used as a currency of measuring the value of his source code. Actually, it seems downright backward. How can reputation be measured? Do you box it up, count it in discrete units, wire it across the country, or spend it? Not really. So, how can it serve as wealth?

Well, reputation serves as wealth in at least two ways. First, reputation manifests itself as social power. The greater one’s reputation, the more decisions one can make and the heavier does one’s vote weighs in group decision making. Further, a greater reputation makes it more likely for one’s code to be accepted readily into mainstream use within the Open Source community. The thinking is that if a hacker’s past code was well-designed, his current code will be as well (The term ‘hacker’ is not a pejorative, but a praise. The correct pejorative is ‘cracker.’ Don’t be a cracker.). So, with the lack of a formal social organization, one’s reputation as a hacker serves as the sole means of determining one’s role and power within Open Sourcedom.

Second, reputation manifests itself in the ability to procure further resources. For example, if one has a good reputation, one is more likely to receive gifts of hardware or bandwidth to support new projects. One is also more likely to receive interesting problems to work on, and to enlist the help of more talented hackers to help them with the project. In fact, a good reputation often has monetary payout, as well. Excellent hackers often receive monetary donations for their code, while people pay to get rid of code from a programmer who is known to do poor work.

One interesting feature of reputation as wealth, and one I hope You all will discuss in the comments, is that reputation behaves quite differently from money. It is true that one can lose both very quickly by making a bad decision, and that it is very difficult to build them up from nothing. An incredibly important difference, though, is the way reputation can be leveraged. A hacker can use his reputation to procure significant resources for a new project and emerge as the project head without ‘spending’ any reputation. He will still be just as well-respected as before the project began. In fact, his reputation might actually increase because of the ‘expenditure’. Most programmers are not powerful enough to head up a new project or have all those new computers donated to their work, so this particular hacker is respected even more for his success. Certainly, the same thing does not happen with money, at least not typically. If one spends money to gain something else, one has less money than previously. It is also worth thinking about the fact that if not used as a measure of wealth, money would not exist, but reputation would still be around. As social creatures, reputation is a basic part of who we are.

The important thing to take away from today’s post, though, is that money is not wealth, and that different measures of wealth are used in communities throughout the world. The OSS community is an excellent example, using reputation and prestige as the primary measure of wealth inside the community. The question of why exactly reputation is the currency of choice is a bit too involved just to tack onto the end of this post, but it is a question I plan to answer in the next post of this series. So, stay tuned.